The next solar manufacturing boom will be in the Middle East

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Obsession

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Written by

Obsession

Another sign that the center of the solar-power universe is shifting: Solar capital expenditures are expected to jump more than 40% annually over the next four years in the Middle East, South America and Africa, while growing just 5% to 10% in Europe and the US, according to a report released today.

Overall, spending on the equipment for making solar panels and on other capital expenditures is projected to increase 30% to $3 billion in 2014, says the report from market research firm IHS. That would be the first global increase in solar capital expenditures since 2011, when a boom in manufacturing capacity by Chinese photovoltaic companies came to an end amid plummeting prices for solar panels.

Capital spending subsequently dropped 72% in 2012, and is expected to fall another 36% this year before recovering next year. But demand has begun to spike in emerging economies. As we’ve written, the Middle East has become one of the hottest of the new solar hot spots; Saudi Arabia intends to spend $100 billion to obtain a third of its electricity from renewable sources by 2032.

The European Union and the US’s imposition of tariffs on Chinese solar cells could also push solar-panel production to emerging markets, according to the IHS report. Chinese manufacturers currently get solar cells from Taiwan and then package them into panels for sale in the US and Europe. That demand has started to drive up prices, Trina Solar executive Mark Mendenhall told Quartz, and that could encourage companies to begin manufacturing in emerging markets.